THOUGHTS ON BERNANKE NOMINATION
The DJIA average surged 169 points today after President Bush nominated of Ben Bernanke as the next Fed Chairman. Why the celebration. Was Alan Greenspan that much of a hindrance and disaster to the market place? If I have learned anything about our democratic system, its that every politician takes orders from someone. Whether its our local Congressman, or U.S. Senators, or even the President, politicians take orders from the big money people who put them in office.
One of reasons I really liked Alan Greenspan was the feeling I got when I saw him. I am probably wrong, but I really got the feeling that he was not beholden to anyone. I always got the feeling that Greenspan wasn't swayed by political pressure, and always relied on economic facts before making any decisions. I don't get that warm and fuzzy feeling with Fed Chairman elect, Ben Bernanke.
After the 1 p.m. eastern time announcement, the stock market went nuts. I view Bernanke as a political appointee since the President named him to the Fed board in 2002, and made him chairman of the president's Council of Economic Advisers this year.
If you have been reading this journal for the last 9 months, you know what my views are on the economic reports we receive from the Commerce Department. Could Wall Street have been celebrating because they finally got someone who could be molded to do what they want? I guess we will see.
I didn't expect the Democrats the cheer Bernanke's nomination since they hate any nomination a Republican makes, but I found it interesting that Hall of Fame pitcher, and Kentucky Senator, Jim Bunning said he would vote against the nomination.
One thing I really like about former star athletes like Bunning is their distaste for political manipulation and backstabbing. Since Bunning one of a handful of Senators who are not lawyers, I have to respect his reasons for not wanting Bernanke. The question that remains is will we ever know what those reasons are, or will Bunning be silenced.
THE MARKET
DJIA: 10,385.00, up 16
S&P 500: 1199.38, up 19.79
NASDAQ Composite: 2115.80, up 33.60
The Dow closed up 169.78 at 10,385. NYSE volume totaled about 1.65 billion shares. The S&P was up 19.79 points. The NASDAQ gained 33.6. Advancing issues beat decliners by 3-1 on the NYSE and by 5-2 on the NASDAQ. But oddly the 10-year Treasury note fell 16/32 to yield 4.45%. What gives?
We still have one more week of mutual fund and hedge fund shenanigan's before the month is over. Historically, the last week in October is when these influential players begin re-posioning their assets back in the market. Oil traded below $60 per barrel for most of the day before closing down 38 cents at $60.35, but energy stocks managed to put on a great show. After getting clobbered for nearly 2 weeks, the energy sector managed to gain 3.4%.
I think you will see an additional rebound in energy stocks in the days ahead. Earnings from the sector will be nothing short of phenomenal, and frankly there is no where else to run. With earnings from other sectors being revised downward, most traders mentalities seem to be "its better to own the devil you know, rather than the devil you don't".
